Analyst says don't be alarmed by drop in gold

An independent gold mining consultant says gloom about the gold price is excessive after the commodity's biggest fall since 1980 earlier this week.

Surbiton director Sandra Close says the gold price has been weakening slowly since it hit a peak last September.

The price decline gathered pace, falling to about $US1,330 an ounce on Tuesday.

Dr Close says speculation about job losses and mine closures is premature.

"The real question is whether it's a sustained downturn or whether we see things drift up again," she said.

"You may well see the grades treated will go up again because over a period of years, we've seen grades going down and down, which is not surprising as the price rose because it means companies can mine lower grade ore and still be profitable.

"But this sort of turnaround, if it stays I'm sure that you'll see grades rising again."

Dr Close says companies should not be concerned about the prospect of merging with other gold miners to remain viable because mining is a long-term business.

"Ever since this gold boom began 30 years ago companies have been merging and we've seen a lot of it in the last couple of years and a lot of it before then," she said.

"People seem to have very short memories sometimes, but it's quite normal. Take a longer term perspective I'd say to some people rather than getting overexcited."